US Dollar exchange rate: The impact of tariff policies and the potential for future downward movement of the US Dollar.

The Federal Reserve Board of Governors (FRB) is cautious about interest rate cuts, focusing on the upcoming employment statistics.

Former President Trump is scheduled to announce details of reciprocal tariff measures targeting all countries this Wednesday, and investors are closely watching the impact of tariff policy implementation on the market. Since last Friday (March 28), the yield on the 10-year U.S. Treasury has recorded a decline of over 4%, reflecting growing concerns about stagflation in the market. Goldman Sachs has raised the probability of the U.S. economy entering a recession over the next 12 months from the previous 20% to about 35%, predicting that the Federal Reserve will implement three more rate cuts this year.

The FRB undoubtedly needs to balance inflation and full employment. Recent data shows that signs of rising inflation and economic slowdown are gradually appearing in the "soft data." The Core PCE Price Index for February, an inflation indicator that the FRB emphasizes, was announced last Friday (March 28) and rose 2.8% year-on-year, exceeding the expected 2.7%. The Consumer Confidence Index hit its lowest level in over two years, while long-term inflation expectations recorded their highest level in 32 years.

However, the Federal Reserve Board of Governors officials remain cautious about interest rate cuts, stating that the U.S. economy continues to be robust, there is no stagflation, and there are upside risks to inflation, with any actual interest rate cuts depending on the inflation situation.

Generally, there is a positive correlation between the yield of the 10-year U.S. Treasury and the U.S. dollar. Therefore, a scenario of U.S. economic recession—leading to an interest rate cut by the Federal Reserve Board of Governors—could likely trigger a depreciation of the U.S. dollar. Investors should pay attention to the employment statistics to be announced this Friday (April 4). If U.S. employment data shows weakness, particularly under the influence of cost-cutting measures in the government sector (DOGE), investors may flock to U.S. Treasuries as a safe asset, putting pressure on the U.S. dollar, U.S. stocks, and the 10-year Treasury yield. Conversely, the opposite scenario could lead to further rebounds in U.S. stocks.

Tariffs and the "Mar-a-Lago Agreement", Key Points Influencing the Outlook for the US Dollar

Wells Fargo has indicated that the future rise of the US dollar will depend on how other countries respond. If other governments do not take retaliatory measures after the United States raises tariffs, the US dollar will gain the maximum benefit. Various models concerning the extent of the US tariff increase and how other countries respond suggest that the US dollar could rise by 1.5% to 11% in the future. Additionally, if foreign investors purchase US Treasury bonds in large quantities due to concerns about a slowdown in the global economy, the US dollar may be supported.

However, the question is whether Mr. Trump really wants a strong US dollar.

In fact, one of the important factors behind the depreciation of the US dollar since mid-January is the worsened outlook for US economic growth in the medium to short term due to rising risks of fiscal policy tightening in the United States. Additionally, the "Mar-a-Lago Agreement" may also put downward pressure on the US dollar, and speculation is spreading in the market that the US government intends to induce a weaker dollar through international cooperation to reduce the trade deficit and revitalize the manufacturing sector.

Considering that Mr. Trump previously mentioned that it is unfair for the U.S. that Japan and China intentionally lower the value of the yen and the yuan, the market is paying attention to whether currency issues will be addressed in future negotiations. Taking all these factors into account, the outlook for the U.S. dollar is believed to be on a downward trend.

The current Ethereum to US Dollar exchange rate is $4,482.78. Fluctuations in the US Dollar exchange rate also impact the prices of major cryptocurrencies, so investors should pay attention to upcoming US economic indicators and policy trends.